March 2021
How Cargo Insurance Benefits You
Taking big risks can result in big rewards. There’s a reason why gambling isn’t just called “winning,” though. And you don’t go out “catching,” you go out fishing. That reason is simple: there are no guarantees in life.
If you’re in the importing and exporting industry, you may be tempted to save some cash by forgoing the investment in cargo insurance. This risk is never going to pay off big, though.
Think about it. Best case scenario is that your cargo gets where it’s going just fine. It’s not like you’re hitting a jackpot because that cargo wasn’t insured.
On the flipside of that is the worst case scenario. Your cargo doesn’t get where it’s going just fine—and you learn the hard way why the pros always recommend purchasing the appropriate cargo insurance.
What Exactly Is Cargo Insurance?
Honestly—it’s just what it sounds like! Chances are that you’ve insured your business, your vehicles, your home, etc. Right? Then why would you be at all resistant to insuring your cargo? When you purchase cargo insurance, you are protecting yourself and your investment in that cargo. Comprehensive cargo insurance can protect you from serious expenses if your cargo is damaged, lost, or otherwise compromised.
Cargo Protection Extends Beyond Insurance
This should go without saying, but you still want to take some basic precautions with your cargo even if you plan on comprehensively insuring it. You’ll want to:
Pack your cargo to protect it from any elements that it may encounter
Correctly and accurately label each of your shipping boxes and/or containers
Complete and process all shipping documentation carefully, and have it ready to present
If you follow these basic cargo packing tips and you also insure your cargo with a reputable provider, you’ll have your bases as well-covered as possible. That brings us to our next point, actually.
Where Do I Purchase Cargo Insurance?
There are a number of different vendors that offer different types of cargo insurance with different levels of protection. We know that this sounds complicated, and there is a lot on the line here. Our experts can help to answer any questions that you may have though, so please don’t hesitate to reach out to JF Moran if you’re feeling a bit overwhelmed by your options.
Generally speaking, you’ll be looking at options from cargo insurance specific companies, or from freight forwarders. Freight forwarders will often have some pretty appealing rates to offer, but don’t just go with the cheapest coverage you can find. More important than who you’re purchasing from is what, exactly, you are purchasing.
Types of Cargo Insurance
You can split cargo insurance options up into two basic categories. These are land cargo insurance and marine cargo insurance. You can probably piece together what points of travel these categories would cover based on their names, right?
Just remember that there is a lot more under the surface to consider. In your research, you may encounter subsets of policies such as:
Open Cover Cargo Policies
Specific Cargo Policies
Contingency Insurance Policy
Your best bet is really to invest in the most comprehensive cargo insurance option. All-risk coverage will net you the most protection, but even this is likely to have some caveats. Talk to your vendor, ask specific questions, and work with qualified professionals that know the ins and outs of this stuff in order to guarantee that you are as well-covered as possible.
But What Are the Chances—
—yeah, we’re going to stop you right there. We don’t mean to be rude, but we simply cannot answer that question. Not in a satisfactory manner, anyway. We can’t tell you exactly what the chances are that you’ll find yourself in a situation wishing that you’d insured your freight.
But we can tell you that these situations happen more frequently than you probably realize.
The number of containers lost in any given year is pretty staggering, and that’s not even including damages outside of actually being lost. This past January, an A.P. Moller-Marsk ship lost several hundred containers in the Pacific as it traveled to LA from China. The 750 containers that this ship lost pales in comparison to the 2,000 boxes lost in November by an Ocean Network Express container vessel.
When you gamble on your chances for event-free cargo shipping, you can’t just walk away from the table and cut your losses. Someone is going to be liable for those losses, and if you’re not insured, you’re going to take a serious hit.
Disasters Don’t Discriminate
You can work with the most trusted shipping partners in the industry, and you’re still going to be at risk of losing cargo. That’s the cold reality of the situation. It doesn’t necessarily mean that they did anything wrong or made a risky decision. Rough seas, inclement weather, equipment failure—there is a lot of potential for things to go wrong en route.
The best way to protect yourself from incurring serious financial setbacks due to lost cargo is to ensure that cargo. We can’t say it any simpler than that. Do your research, and don’t make assumptions. Reach out to the JF Moran team if you have any questions about what you can do to best protect your cargo, your clients, and your bank accounts.
Would you welcome improved visibility of your shipments?
If your answer is “yes” to having key knowledge about your shipments, we have the solution for you. It’s our Supply Chain At-A-Glance Report. Learn more about this and what it can do for you – and then request yours.